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[MARKET ANALYSIS] Gilts notch a fresh contract high into the TSC

Gilts have reached a fresh contract high ahead of the Treasury Select Committee meeting, indicating positive momentum in the UK bond market.

Newsquawk StaffPublished On the live feed at — 5 more headlines followed before this page went public
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[MARKET ANALYSIS] JPY dragged on reports PM Takaichi raised reservations about rate hikes to BoJ Governor Ueda, DXY slightly firmer

[MARKET ANALYSIS] WTI and Brent trades firmer as risk premium from geopolitical development between the US and Iran continue

[MARKET ANALYSIS] Gilts notch a fresh contract high into the TSC

China announces that the hot-rolled steel coil issue with South Korea has been resolved

Russia's Kremlin highlights that the special operation goals have not yet been achieved, cannot provide a date for the next round of Ukraine talks

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  • Benchmarks climbed into the end of Monday's session as the risk tone was hit on AI disruption fears. Since, broadly speaking, the fixed complex has been contained in proximity to those highs.
  • JGBs were boosted this morning by a Mainichi report that PM Takaichi relayed reservations to BoJ Governor Ueda about further tightening, with Takaichi's stance described by the sources as "stricter" vs their last meeting. This lifted JGBs by around 30 ticks to a 133.10 peak.
  • BoJ pricing has dipped marginally, with a bp or so of easing actually implied for March now. More pertinently, a hike isn't priced until September, where 30bps of tightening is implied. As a reminder, April wage data and by extension the April (+10bps implied) and June (+18bps implied) meetings are the main focus point of the market at this time.
  • USTs flat, in a narrow 113-07+ to 113-13 band. Awaiting further updates on the AI disruption narrative, US-Iran and numerous Fed officials. From those, the most pertinent include Cook (voter), who, in early February, said she supported waiting after December to cut again and described tariff price-rises as temporary. Waller (voter) has already spoken post-SCOTUS, saying the impact would likely be limited. The docket also includes 2027 voters, Barkin & Goolsbee, and 2028 voter Collins.
  • Bunds firmer by around 10 ticks, holding just off a 129.73 peak which is just above Monday's 129.71 best. ECB's Lagarde theoretically headlines the docket, though she has spoken extensively recently. As such, the benchmark will likely conform to leads from USTs and the global risk tone if there is an AI/tariff/US-Iran update.
  • Gilts also firmer by around 10 ticks and at a 92.97 peak, taking out the high from January and notching a fresh YTD and contract best. For the UK, the main event is the Treasury Select Committee. Pertinently, Governor Bailey headlines the outing alongside known dove Taylor and the hawkish Greene & Pill. The Governor and the two hawkish members are the focus, for any hint that the recent string of data and/or tariff updates have pushed them towards easing in the near-term. Commentary that will, by extension, inform on the ongoing debate between March and April, with 21bps of easing implied for March and 27bps in April.
Context
This development is essential as it reflects underlying investor sentiment amidst uncertainty around potential interest rate movements, particularly as discussions around easing policy gain traction among key policymakers. The performance of other bonds, including US Treasuries and Bunds, suggests a broader trend in fixed income, where risk sentiments are heavily influenced by geopolitical developments and economic commentary.

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